EURO
History, introduction and
importance today
Plan of presentation
• HISTORY AND INTRODUCTION
OF THE EURO
• CONVERGENCE CRITERIA
• EURO BANKNOTES AND COINS
• IMPORTANCE OF THE EURO
Eurozone
• Austria
• Belgium
• Cyprus
• Finland
• France
• Germany
• Greece
• Ireland
• Italy
• Luxembourg
• Malta
• the Netherlands
• Portugal
• Slovenia
• Spain
The Werner Plan
• Pierre Werner -
Luxembourg Prime
Minister and Finance
Minister
• 1970 – creation of an
economic and monetary
union in three stages
(until 1980)
• serious economic
problems in the world –
the plan was abandoned.
European Monetary System
• 1979 – Meber States linked their
currencies to one another to prevent large
fluctuations of exchange rates.
• Exchange Rate Mechanism (ERM)
• European Currency Unit (ECU)
The Delors Report
• 1989 – introduction of
economic and
monetary union in
three stages.
• Strasbourg Summit
- summoning an
intergovernmental
conference to make
the necessary
modifications to the
Treaty.
Stage One:
1.07.1990 to 31.12.1993
• all restrictions on the movement of capital
between Member States were abolished.
• 1.11.1993 - the Treaty of Maastricht came
into force.
Stage Two:
1.01.1994 to 31.12.1998
• European Monetary Institute
(predecessor to the ECB)
• 1995 – the name ”euro” accepted
• 1997 - Stability and Growth Pact
- ERM II
• 1998 - European Central Bank (replaced
EMI)
• Selection of participants of the third stage
(11 Member States)
Stage Three:
from 1.01.1999
• Introduction of euro as an accounting
currency
• Fixed conversion rates between the euro
and the currencies of the participating
Member States
• single monetary policy was commenced
Convergence criteria
• Inflation rate: <1,5% of the average rate of inflation of
the three Member States with the lowest inflation.
• Government finance:
– annual government budgetary deficit must not exceed 3% of
GDP.
– the gross government debt must not exceed 60% of GDP.
• Exchange rate: participation in ERM II for 2 years, no
devaluation during this period.
• Long-term interest rates: <2% of the
corresponding interest rate in the three member states
with the lowest rate of inflation.
Euro coins and banknotes
• 2002 - euro banknotes and coins
were put into circulation.
• Eurosystem - European Central Bank and the
central banks of the member states that belong
to the Eurozone
• ECB – authorizes the issue of euro banknotes
(the same design in all Eurozone countries)
• Member States – issue euro coins (common
design on one side and a country-specific
design on the other).
Euro coins and banknotes
The importance of euro
Consumers benefits:
- more competition, more choice
- stable prices
- low inflation rate
- easier and cheaper way of traveling
The importance of euro
Businesses benefits:
- eliminating currency exchange costs
- facilitating cross-border trade
- providing greater security and economic
stability
- encouraging long-term planning and
investments
The importance of euro
Member States benefits:
- stable currency with low inflation and low
interest rates
- sound public finances
- economic stability and growth
- stronger presence of the EU members in
the global economy
Thank you for your
attention.